Why Shop Lenders?
One time, a client of mine got pre-approved with her big name bank. The rate the bank quoted her seemed very high to me at the time and I encouraged her to check with one of my contacts. She was shocked that I thought it was high, she’d banked there forever. However, she did shop around and then called me as soon as she got off the phone with one of them and said, “so get this.” She told me about how the mortgage broker she called quoted her a rate 3/4 of a point lower! That’s a big difference. She then called her contact at the bank back and asked why she, a loyal customer of over 30 years, was being quoted such a high rate. Their suggestion was for her to BUY her rate down. Uhhh, excuse me?
How much of a difference does .75% make? Quite a bit. For example, on a $150,000 house with a 30 year loan at 4.5% & 3.75%, that difference is $65.36/month and $23,529.60 over 30 years. Even if you only stay there 5 years, that’s $3,915.60!! Who wants to throw that away??
I don’t mean to speak poorly about getting a mortgage through your bank. Sometimes, your bank can give you a great rate! But it is important that you have something to weigh your quote against to know where you stand. When you check with an independent mortgage broker, they’re generally able to run it through a couple different investors who purchase those mortgages from the brokers after you close. So they’re essentially checking prices for you on their end, as well! In my opinion, local lenders may be better versed in various local bond programs, tribal contributions, etc. than out of state or “online” lenders. If you’re Native American or wanting to use a downpayment assistance bond, I highly recommend you check with a local mortgage broker who is intimately familiar with the positives and negatives of each scenario available to you.
When you think of financing, you think of your banking institution. That’s normal! But do your due diligence and at least check with a well-rated or recommended local lender to see what options you have!
Best of luck finding your spaces!!